06 Nov What if you could retire early? A look at Super possibilities
Let’s face it – nothing exceeds the savings you’ll need for retirement. Add up your car, a 20 percent deposit on your home, the cost of private education, and a good ten years of annual week-long holidays in Bali, and you still may not come close to what you’ll need for those post-work years.
The reality is, if you don’t focus on saving and make the funds in your super account work for your financial goals, you may end up like most Australian adults – unprepared.
According to an IPSOS survey of adults not yet retired, only 15 percent view themselves as ‘very well or fairly’ prepared for retirement. The projected savings gap for Australians as a whole, taking into account the age pension, is expected to reach $768 billion over the next couple of decades, leaving many without enough to live comfortably.
Despite all the apparent financial doom and gloom, if you look at superannuation and retirement preparation in another light, you’ll see that there are opportunities. Each individual Australian or couple has the choice to take a strategic approach to their super – and maybe even retire early!
While everyone has unique financial goals and circumstances, with a smart, proactive approach, there’s plenty of potential when it comes saving for retirement and enjoying the financial security you deserve.
What Australians are up against when it comes to retirement savings
When you retire, you’ll have to have enough investment income coming in from your assets – in super and other accounts, if you have any – to make up for your earned income. You’ll be able to access your super between the ages of 55 and 60. In order to afford a modest lifestyle, and assuming you already own your own home, a single person would need $545,000 in super. A couple would require $640,000. With this amount, you could maintain your car, pay for air conditioning, and have some money for holidays.
Depending on your lifestyle, you may want to have more than this.
If you are eligible for the age pension, you’ll start receiving it at age 65 ½, although starting in 2023, the eligibility age goes up to 67. On average, the age pension will make up for about one-quarter of full-time weekly earnings, which is not enough to cover many expenses.
The reality is, Australians are living longer today – and life expectancy continues to increase. For a 65-year-old male, future life expectancy is 19.7 years. For women, it’s 22.3 years. And these are just the averages. To ensure you have enough, you may want to plan to have enough savings to see you through another three decades of life once you quit working!
How to grow your super and have the option to retire early
So, what can you do to set yourself up for a comfortable, secure retirement? What steps can you take, today, that could help you have the option of retiring early?
No matter what age you are now, or how much you already have saved, there are ways to increase your super and to set yourself up for a comfortable future. Even making small extra contributions now, such as $10 or $20 a week, can add up to tens of thousands more in your super when you retire.
The key to living well in retirement is to accumulate assets. The more assets you have, the greater return you’ll receive, which means more money to live off of or to reinvest.
And, the more you know about how to invest and what choices you have available to you, the more empowered you are to make financial decisions that serve your long-term goals.
The same IPSOS survey that revealed the anxieties many of us have over our finances in retirement, also found that the numbers start to look brighter for those who seek out professional financial advice.
Australians who used a financial planner or adviser were 35 percent more likely to feel ‘very well or fairly’ prepared for retirement. Over three-quarters who used professional services believed their superannuation would be enough – only 54 percent of those who didn’t talk to a financial adviser felt that their super savings would be adequate.
When you talk with a financial adviser who takes the time to understand your unique situation, goals, and timeline, you can make better-informed decisions about your wealth. Knowing factors such as when to invest in property, if a Self-Managed Super Fund may be right for you, and how much you should be contributing to super yourself can make an immense difference.
Depending on how much you save and what investment strategies you take, you may even be able to retire early. Imagine stopping working in your 50s or early 60s – what would you do with that time?
The best thing you can do for your future is to start focusing on retirement now
Whether you want to retire early or you want to ensure you can maintain your lifestyle for all your retirement years, there are always solutions available to you. At Wealth Inspired, we’ll sit down with you, listen to your goals, and make sure you know all the possibilities you have to choose from. We’ll work with you to create a personalised strategy and we can help you as your needs change over time.
Contact us today to set up an appointment and gain the peace of mind that financial knowledge offers.